AE Impact Story: Estimating the Size of the Middle Class

Aim of Project

The growth of national incomes in the Caribbean and Central America suggest that poverty rates in the region should be falling and that a larger proportion of the population is moving into the middle-income and higher income classifications. As such, a larger proportion of the population within these countries should be able to afford certain goods. If this is the case, this region would have represented a significant growth market for our client.

Antilles Economics was commissioned to estimate the size of the middle class, its expected growth rate, the average monthly expenditure by middle-income household, and the proportion of that expenditure that was dedicated towards the category of items our client sold.

What We Did

Unfortunately, there was no single database that would have allowed us to answer all of these questions for all of the countries under consideration. Furthermore, the definition of ‘middle class’ varies according to the unique income distribution characteristics of each country. As such, we compiled data from multiple reports in both English and Spanish. The data was standardised to ensure comparability and the required estimates were computed using various statistical techniques.

Impact

The client used the information to determine whether to increase its investment in the region; to identify the countries that could propel growth in revenues; and, to inform its medium-term strategy for the region generally.